ANNUAL REPORT JSCB Almazergienbank JSC 2019
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Preliminarily approved by the Approved by the Supervisory Board of General Shareholders Meeting of JSCB Almazergienbank JSC JSCB Almazergienbank JSC Protocol # 27 dated August 21, 2020 Protocol #1 dated September 29, 2020 ANNUAL REPORT JSCB Almazergienbank JSC 2019 1. INTRODUCTION 3 2. AEB GROUP TODAY 6 3. MISSION AND VISION 11 4. PRIORITY AREAS OF ACTIVITY 12 5. MAJOR AREAS OF ACTIVITY AND RESULTS OF 2019 12 5.1. The Bank’s position in the sector 12 5.2. Key events of the year 2019 18 5.3. Implementation of the Bank’s Strategy 19 5.4. Corporate business 20 5.5. Retail business 28 5.6. Securities Trading 34 5.7. Financial indicators 35 5.8. Risk Management 37 5.9. Prospects of the Bank’s development 48 6. CORPORATE GOVERNANCE 49 6.1. Corporate governance system review 49 6.2. General Shareholders Meeting 52 6.3. Supervisory Board 54 6.4. Committees of the Supervisory Board 66 6.5. The Management Board (at 31.12.2019) 72 6.6. Remunerations to the members of the Bank’s Supervisory Board and Management Board 77 6.7. Internal control and audit 81 6.8. Information policy and information disclosure 87 7. SUSTAINABLE DEVELOPMENT 89 7.1. Personnel 89 7.2. Responsible resource management 96 7.3. Social responsibility 98 7.4. Society and business support 100 8. APPENDICES 106 8.1. Authorized capital 106 8.2. Dividends of the bank 108 8.3. Licenses of the bank 109 8.4. Information on the bank’s transactions 109 8.5. Report of the bank’s compliance with the Corporate Governance Code 109 8.6. Membership in professional associations 132 8.7. Requisites of the Bank 133 2 1. INTRODUCTION This report is the report of the Supervisory Board of JSCB Almazergienbank JSC on the results of the Bank’s performance in 2019. The Bank’s Annual Report has been prepared in full compliance with the legislation of the Russian Federation, including the Federal Law of December 26, 1995 № 208-FL “On the joint- stock companies”; the Regulations of the Bank of Russia of December 30, 2014 № 454-R “On the information disclosure by the issuers of the issue-grade securities”; the Letter of the Bank of Russia of February 17, 2016 №IN-06-52/8 “On the disclosure in the annual report of the public joint- stock company of the report on compliance with the principles and recommendations of the Corporate Governance Code”. The Annual Report has been prepared based on the accounts by the Russian Accounting Standards1, confirmed by the Listik and Partners LLC on April 06, 2020. The Annual Report of JSCB Almazergienbank JSC for the year 2019 has been: Preliminarily approved by the Bank’s Supervisory Board as per Protocol №27 of 21.08.2020; Approved by the Bank’s General Shareholders Meeting as per Protocol №1 of 29.09.2020 General information about the Bank Full name of the Bank: Joint-Stock Commercial Bank Almazergienbank Joint-Stock Company. Abbreviated name of the Bank: JSCB Almazergienbank JSC Number and date of registration at the National Bank of the Russian Federation - № 2602 of 06.12.1993. Shareholders and authorized capital At 01.01.2020, the Bank’s authorized capital makes RUB 3 208 084 446. 1 This report has been prepared based on the data of the disclosed reporting forms: 0409806 “Balance sheet (disclosed form)”; 0409807 “Profit and loss statement” (disclosed form)»; 0409808 “Report of the capital adequacy ratio, loan loss provision and other assets (disclosed form)”; 0409813 “Information on the statutory ratios, financial leverage ratio and liquidity coverage ratio” (disclosed form); 0409814 “Cash flow statement (disclosed form)”; explanatory notes to the accounts (financial reporting). Therefore, the values of financial indicators in dynamics for the previous reporting periods may not correspond with the data in the annual reports for the years 2015-2016, prepared based on the Bank’s management reports. 3 The Bank’s shareholders are as follows: The Ministry of Property and Land Relations of the Sakha Republic (Yakutia) – 85,82%; RIC Plus Joint-Stock Company - 6,62%; The Committee for Precious Metals of the Sakha Republic (Yakutia) – 4,90%; Development Corporation of the Sakha Republic (Yakutia) Joint-Stock Company - 0,94 % Other – 1,73%. Deposit insurance scheme Since January 27, 2005, JSCB Almazergienbank JSC has been included in the Register of the banks participating in the obligatory deposit insurance scheme. The Bank’s number in the Register - 540. Information about the auditors 1. IFRS Auditor: Full name: PricewaterhouseCoopers Audit Joint-Stock Company. Legal address: 125047, Moscow 10 Butyrsky Val 2. RAS Auditor: Full name: Listik & Partners Limited Liability Company. Legal address: 454090, Chelyabinsk, 6в Pushkina Organizational structure The organizational structure of JSCB Almazergienbank JSC is based on a model of a top- down (vertical) type and contains five blocks, formed with account of the banking activity by their functions. Control and Risks Block includes the system of bank risk management, the system of analysis and planning, HR management, legal support, financial monitoring, internal control system, methodological support of business, public relations, provision of economic, technical, own and information security, and a secretariat, subordinate to the Chair of the Management Board; Business Block, consisting of the units servicing/providing services to the corporate and retail customers, including the territorial network; units engaged in financial and interbank markets, subordinate to the First Deputy Chair of the Management Board; 4 Development and IT Block subordinate to the First Deputy Chair of the Management Board, including technical and customer service, customer service standards and provision of remote services, innovative development and transformation of the management model and business processes. Accounting Block includes accounting and tax management and reporting, subordinate to the Deputy Chair of the Management Board – Chief Accountant; Maintenance Block, subordinate to the Deputy Chair of the Management Board, includes administrative support, occupational safety and subsidiaries management. Scheme 1 – Organizational structure of JSCB Almazergienbank JSC at 01.01.2020 General Shareholders Meeting of JSCB Almazergienbank JSC Supervisory Board of JSCB Almazergienbank JSC Internal Audit Chair of the Management Corporate Secretary Service Board Management Board of JSCB Office of the Corporate Almazergienbank JSC Secretary First Deputy Chair of First Deputy Deputy Chair of the Deputy Chair the Management Chair of the Management Board of the Board Management – Chief Accountant Management Board Board Accounting, Tax Control and Management and Maintenance Business Block IT Block Risks Block Reporting Block Block 5 2. AEB GROUP TODAY Together with the main credit organization, the banking group of JSCB Almazergienbank JSC includes four subsidiaries: AEB Capital LLC, AEB IT LLC, MFC AEB Partner LLC, SAYBM LLC and a related entity Sayuri LLC. The main goal of establishing the subsidiaries is to capitalize the banking group, increase investment appeal and sustainable business development. Scheme 2 – Banking Group JSCB Almazergienbank JSC 100% 97,56% 100% 100% 9,48% AEB Capital LLC AEB IT LLC SAYBM LLC Sayuri LLC (established in (established in MFC AEB Partner (established in (established in 2015) 2016) LLC (established in 2017) 2016) 2016) Commercial Software activity and Indoor vegetable Construction development and Lending management planting IT consulting consulting AEB Capital LLC was registered in 2015; the Bank’s share in the company’s share capital makes 100%. AEB Capital is a young dynamic design, construction and development company in the Sakha Republic |(Yakutia). Since its establishment in 2015, the company has commissioned residential buildings totaling 28 709 m2 with over 1 000 residents and industrial facilities totaling 14 254 m2, aimed to support the local producers and producing the value-added products. In the year under review, the company conducted general construction works on the following construction units: Construction of Stage 3 of the year-round greenhouse complex in Syrdakh settlement on general contract terms, owner Sayuri LLC. Total contract value RUB 263 million. Construction volume 8 445 m². Facility completion deadline – Quarter 2, 2020; Construction of a jewelry and lapidary plant in the Kangalassy Industrial Park Advanced Economic Development Area on general contract terms, owner – SAYBM LLC. Total contract value RUB 160 million. Construction value 2 014 m². Commissioning certificate was obtained on 08.10.2019; 6 Construction of a 64-apartment residential building (building 3-3) at: Yakutsk, Microdistrict 203. Facilities’ sales cost RUB 407 million. Construction volume 5 596 m². Facility completion deadline – Quarter 3, 2020; Construction of a 264-apartment residential building (building 2-1) at: Yakutsk, Microdistrict 203 on general contract terms, developer IFC RFA-Invest JSC. Total contract value RUB 549 million. Construction volume 23 572 m². Commissioning certificate was obtained on 26.11.2019; Construction of an apartment building in Microdistrict 203, building №4-1 on general contract terms, owner – RDR Group LLC. Total contract value RUB 309 million. Construction volume 7 577 m². Facility completion deadline – Quarter 4, 2020; Construction of 2 residential buildings in Namtsy village under the program of rehousing from dilapidated dwellings. Facilities’ sales cost RUB 192 million. Construction volume 2 574 m². Facility completion deadline – Quarter 4, 2020. Total construction